Role of the official receiver

Part 1 The role of the official receiver

December 2011  

3.2 Duty to investigate

When a winding-up order has been made by the court the official receiver has a statutory duty to investigate:

  • the cause of failure, if the company has failed, and
  • the promotion, formation, business, dealings and affairs of the company generally [Note 1].

The duty to investigate applies in all cases including those where an insolvency practitioner is appointed liquidator by the court immediately on the making of the winding up order (see paragraph 3.11 for further information).

 

3.3 Report to court

In fulfilling his/her duty to investigate the affairs of the company the official receiver may make a report to the court if he/she thinks fit [Note 2].

 

3.4 The official receiver appointed liquidator

The official receiver is appointed liquidator on the making of the winding-up order unless the court orders otherwise [Note 3]. See paragraph 3.11 for the cases where the court may appoint a liquidator other than the official receiver. The official receiver will remain liquidator until someone else is appointed. He/she becomes liquidator during any subsequent vacancy.

 

3.5 The official receivers functions as liquidator

One of the functions of the official receiver is to protect the companys assets and, where appropriate, to take into custody or under his/her control all property, etc. to which the company is or appears to be entitled. The official receivers functions include realising and distributing the companys assets to its creditors and, if there is a surplus, to the persons entitled to it [Note 4].

 

3.6  The realisation of assets at the initial stage

There is no reason why the official receiver should not use his/her powers as liquidator to realise those assets which are easy to realise or those that may be rendered valueless by the date of the first meeting, such as perishable stock, bulky items which are expensive to store or small value bank balances held in accounts that incur charges. Even where the early realisation of an asset(s) might prejudice the appointment of an insolvency practitioner the official receiver should act in the best interests of creditors and seek realisation. Further information on the realisation of specific assets can be found in Chapter 31.

 

3.7 The Insolvency Service Standard and the realisation of assets

The official receiver should, as per the Casework Standard take steps to contact the director(s) or relevant third parties to decide whether immediate action is required to collect, secure and protect (obtaining insurance where appropriate) the assets of the company. The official receiver should decide to complete an inspection where required. Where an inspection is required see Chapter 8 for further guidance The Insolvency Service Casework Standard can be read here.

 

3.8 The completion of company contracts by the official receiver

A company, against whom a winding-up order is made, may have a number of contracts which have not yet been completed. The official receiver should consider whether he/she needs to complete any contracts as liquidator or, in certain circumstances, issue a disclaimer. The official receiver does not need the sanction of the court or liquidation committee to complete the contract. Before deciding to complete any contracts the official receiver may decide it would be beneficial to seek the views of the major creditors. Further advice on dealing with work in progress is contained in Part 3 of Chapter 31.6. Further information on carrying on a business is contained in Chapter 62. See Part 1 of Chapter 34 for further details of the matters to be considered by the official receiver before issuing a disclaimer.

 

3.9 Meetings of creditors and contributories

The official receiver should obtain information about the company's assets and liabilities at an early stage. Unless the court has already appointed a liquidator (see paragraph 3.11) he/she can then make a decision to summon separate meetings of creditors and contributories to appoint a liquidator, if appropriate [Note 5].  The meeting decision is usually made when completing the ISCIS Conduct Assessment Tab (see paragraph 3.106)

 

3.10 Confidentiality

The official receiver must not disclose information about a company or its officers to any person who does not have a legitimate reason to have the details of the case. For further details on the disclosure of information see Chapter 47.

 

3.11 The court appoints an insolvency practitioner as liquidator immediately

A winding-up order may be made immediately the appointment of an administrator ceases to have effect. Also a winding-up order may be made against a company with a supervisor appointed under a voluntary arrangement. In these instances the court on making the winding-up order may appoint the former administrator or supervisor as liquidator of the company [Note 6].

 

3.12 The liquidator’s duty to the official receiver

The liquidator has a duty to co-operate with the official receiver to enable him/her to carry out his/her functions and should be a useful source of information about the company, especially in the initial stages. The liquidator must produce or allow the inspection of the company's books, papers and other records. This may involve visiting the liquidator's offices [Note 7]. If the liquidator fails to co-operate the official receiver may apply to the court for an order to enforce compliance [Note 8]. 

 

3.13 The official receiver's duties where there is a court appointed liquidator

The official receiver’s statutory duty to investigate the affairs of the company remains [Note 9]. Where the official receiver in the course of his investigations discovers undisclosed assets, which may include rights of action, he/she should inform the liquidator and provide copies of any relevant documents (see Chapter 47 part 4 for further details) [Note 10]. The official receiver is required give notice of and gazette the winding-up order and provide information to creditors and contributories [Note 11].

 

 

3.14 Court appointed liquidator – meetings of creditors and contributories

Where a liquidator is appointed by the court on the making of the winding-up order the official receiver is not required to summon meetings of creditors and contributories, or issue notice of no meeting [Note 12]. It is the liquidators duty to send forms of proof of debt to creditors, and a proof of debt form must be sent to any creditor of the company on request.

 

3.15 Insolvency practitioners

The company may have dealings with other companies or individuals subject to insolvency procedures and where there is involvement of insolvency practitioners. Further information about insolvency practitioners in general is produced in Chapter 55.

 

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